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Last Updated: Saturday, 21 January 2006, 15:04 GMT
Child Trust Fund vouchers expire
By Sonia Rothwell
BBC Radio 4's Money Box

Miles Bingham from Family Investments has concerns

Eleven financial companies, some of them very small, will soon benefit from more than 160 million of taxpayers' money.

Two million child trust fund (CTF) vouchers worth at least 250 each have been sent to every child born from 1 September 2002.

Parents have one year from the date the vouchers are issued to invest them and the first vouchers, which were despatched a year ago this week, will soon become void. As a result, the Government will start to invest the vouchers on behalf of parents.

600,000 vouchers uninvested

The Inland Revenue will pass the names of an estimated 600,000 uninvested vouchers on to organisations which have volunteered to run what are officially called "Revenue Allocated Accounts".

All of them, from the biggest to the smallest, will get the same share of the business, which is 50,000 vouchers each or fourteen and a half million pounds of extra custom. The accounts will be allocated on a rotational basis.

We do not want people coming out in 18 years time with very small child trust funds.
Miles Bingham, Family Investments

The Revenue will not reveal the names of the default providers, but Money Box has found ten companies who have said they are on the list. Apart from Halifax, there are not many other household names - Scottish Friendly and Forester's Life for example are two of the less familiar ones.

Administrative overload

And one of the larger default providers, Family Investments, has said it is concerned that smaller providers will not be able to manage the extra administration work. Miles Bingham from Family Investments told Money Box,

We have invested in a new computer system and a new telephone system to deal with queries
Don McCamley, Schoolteachers Friendly

"There's a real question mark over whether they can cope in terms of the people and in terms of their management skills. We do not want people coming out in 18 years time with very small child trust funds."

Don McCamley, the chief executive of one of the smallest companies, Schoolteachers Friendly, has given reassurances that his four full time staff will be able to cope.

"We have invested in a new computer system and a new telephone system to deal with queries. Obviously if we require additional staff, we will employ them"

Schoolteachers Friendly has said an Inland Revenue team has vetted their system and is satisfied it is adequate.

But Money Box has found two small societies, Druids Sheffield and Kingston Unity Friendly, which have had to pull out of the default scheme because they did not think they could cope with the extra work.

The following companies have confirmed to Money Box that they will run the Revenue Allocated Accounts.

Children's Mutual
Engage Mutual
Family
Halifax
Pilling and Co
Schoolteachers
Scottish Friendly Asset Managers
The Share Centre
Foresters Life
Ulster

BBC Radio 4's Money Box was broadcast on Saturday, 21 January, 2006, at 1204 GMT.

The programme will be repeated on Sunday, 22 January, 2006, at 2102 GMT.



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